When the tariffs come, there’s seemingly no end to the increased costs that accompany them. Now, a new survey has shined the light on how fly-by-night trade policies are increasing costs in places few may yet be considering.
Among their manifold challenges, tariffs are “materially disrupting contract management operations,” according to Agiloft, a CMS software firm endeavoring to explore the issue. They’re causing negotiations to be more complex, they’re shifting supplier relationships and they’re impacting onboarding processes.
Tariffs were never the rampant and business-shaping issue they are today. They were once mulled about in closed-door discussions and changed infrequently with plenty of advanced notice—a stark contrast to President Trump’s recent 100 percent tariff threat on China that sent U.S. and Asian markets swinging before the former recovered and the latter slid. Today, tariffs are weapons of global trade destruction.
“Nowhere has this been more evident than in the work undertaken by contracting professionals, whose work product sets the ground rules for all inter-organizational relationships,” the report, which surveyed 600 professionals across the U.S. and U.K., said. The strain is more than financial, it’s operational.
More than half of respondents said the current trade environment has forced an increased focus on compliance and legal review processes. In the U.K., 54 percent said contract terms are changing more frequently owed to regulations influx, compared to 46 percent of U.S. respondents who said the same.
“Businesses are adapting clauses, pricing terms and delivery schedules to account for new tariffs, trade restrictions or import/export rules,” Agiloft said. “This signals the volatility and ongoing adjustments needed to maintain compliance and competitiveness in changing environments. Meanwhile, an increase in the frequency and volume of contract revisions makes it vital for contracting professionals to have clear access not just to stored agreements, but to systems that transparently and clearly display the history of their negotiations.”
Contracts should now account for really specific scenarios with language and clauses that address varying possibilities, things like termination of convenience, according to Brittany Leonard, general counsel and business operations executive who spoke on a recent Agiloft webinar.
The gist of these clauses could be as simple as “If tariffs are x times the price of what we’re paying now, can you let us get out of it? Can we use it as a force majeure?” Leonard said. Then, companies should consider how things go from there, whether they want to preserve the supplier relationship to keep receiving a product they’re pleased with. At the end of the day, the contract should be exceedingly clear about how much companies are going to let tariff shifts impact their bottom line, as well as leave openings for companies to explore alternatives that could be more cost effective.
When it comes to costs, nearly 72 percent of those surveyed agreed or strongly agreed that tariffs have led to higher costs in contract management. “These high agreement rates highlight a widespread operational burden, requiring more time, resources and expertise in contract handling,” the report noted.
The reality is also impacting supplier strategies. In the U.S., more than 49 percent of respondents said they’ve had to change suppliers to curb costs and risk, but in the U.K. a much higher 60 percent said the same. More than 52 percent of professionals in the U.K. have had to end supplier relationships because of tariff pressure.
“Supply chain recalibration appears to be a common response to shifting tariff regimes, creating cascading effects on contract renegotiations and management,” Agiloft said. “This sort of disruption can be deeply damaging to buyers and sellers alike: planning ahead for turbulence by clearly outlining the responsibilities for each party in standard agreement templates is becoming fundamental to building resilient supply chains for the foreseeable future.”
All of this tariff strife is shifting sourcing maps, too. While the study didn’t include insights as to where companies are moving to make their goods, as many as 57 percent of U.K. respondents said they’ve entered into new supplier relationships in unfamiliar markets or regions, compared to 51 percent in the U.S. That all means more uncertainty, potentially greater risk and certainly more onboarding and compliance workloads—and their accompanying costs. What’s more, as the report noted, “these onboarding delays can create friction that slows down everything from production timelines to revenue realization.”
Digging into where exactly tariffs are having the greatest impact, nearly 50 percent U.S. respondents said they’re seeing increased costs for imported materials (compared to 46.2 percent in the U.K.), nearly 42 percent said they’re seeing reduced profit margins (compared to 42.5 percent in the U.K.), and nearly 48 percent of U.S. respondents said tariffs are impacting customer pricing and demand (compared to 45.3 percent of U.K. respondents who said the same).
To navigate it all, companies should have tools in place to keep track of previous contract interactions and details, enhance supplier vetting and onboarding, cross-training legal and procurement teams to adapt faster and more effectively to the constant shifts, and be set up for scenario planning to get ahead of future issues.
“Tariffs are no longer just a matter of cost—they’re a systemic force reshaping how organizations manage contracts, suppliers and compliance,” Agiloft said.
